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Can ChatGPT assist in picking stocks?

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  • Pelster, Matthias
  • Val, Joel

Abstract

This paper studies whether ChatGPT-4 with access to the internet is able to provide valuable investment advice and evaluate financial information in a timely manner. Using a live experiment, we find a positive correlation between ChatGPT-4 ratings and future earnings announcements and stock returns. We find evidence that ChatGPT-4 adjusts ratings in response to earnings surprises and news events information in a timely manner. An investment strategy based on “attractiveness ratings” by ChatGPT-4 yields positive returns.

Suggested Citation

  • Pelster, Matthias & Val, Joel, 2024. "Can ChatGPT assist in picking stocks?," Finance Research Letters, Elsevier, vol. 59(C).
    • Handle: RePEc:eee:finlet:v:59:y:2024:i:c:s1544612323011583
    DOI: 10.1016/j.frl.2023.104786
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    References listed on IDEAS

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    Cited by:

    1. Minh Tam Tammy Schlosky & Serkan Karadas & Sterling Raskie, 2024. "ChatGPT, Help! I Am in Financial Trouble," JRFM, MDPI, vol. 17(6), pages 1-39, June.
    2. Christian Fieberg & Lars Hornuf & Maximilian Meiler & David J. Streich, 2025. "Using Large Language Models for Financial Advice," CESifo Working Paper Series 11666, CESifo.
    3. Ma, Feng & Lyu, Zhichong & Li, Haibo, 2024. "Can ChatGPT predict Chinese equity premiums?," Finance Research Letters, Elsevier, vol. 65(C).
    4. Ko, Hyungjin & Lee, Jaewook, 2024. "Can ChatGPT improve investment decisions? From a portfolio management perspective," Finance Research Letters, Elsevier, vol. 64(C).
    5. Beckmann, Lars & Hark, Paul F., 2024. "ChatGPT and the banking business: Insights from the US stock market on potential implications for banks," Finance Research Letters, Elsevier, vol. 63(C).

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    More about this item

    Keywords

    Information processing; Artificial intelligence (AI); ChatGPT;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G17 - Financial Economics - - General Financial Markets - - - Financial Forecasting and Simulation

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